As we head into the coldest part of the season, let’s remember that Connecticut is actually two different states.
The families who dwell in one part of Connecticut have taken an economic beating from a pandemic-induced meltdown.
The other Connecticut – much smaller but more powerful – is busy counting their cash. For them, chaos has been profitable, sometimes by means of their industry (Zoom, Netflix) and sometimes because that is the nature of corporations. Profit is all.
But while one Connecticut continues to struggle, a recent request to raise rates from two of the state’s largest electric companies – pending approval by PURA, the regulatory agency that oversees such things – falls somewhere between tin-eared and greedy. Or maybe it’s both.
An August Bloomberg report said 20 million American homes are behind on their energy bills, and surging prices have created the “worst-ever crisis” in late utility payments. Drive down any street in the state, and the family in every sixth home owes money on their energy bill.
That gets missed in discussions about the increases sought by Eversource ($85 and change per month per customer) and United Illuminating ($79 and change). Both companies already enjoy healthy profits. The state attorney general, William Tong, issued a statement that called the new proposed rates “punishing.”
I’d add “damn near unbearable.”
In a state that already has some of the most expensive electric bills in the country, Eversource is asking that their Standard Service Rate – the cost of energy used by ratepayers and bought by the electric companies for their customers – for residential customers be raised from 12.1 cents per kilowatt hour to 24.2 cents. United Illuminating is asking that their Standard Service price for residential customers be raised from 10.62 cents to 21.94 cents per kilowatt hour.
You can get lost in the weeds on some of this, but let’s keep things simple, and look at net profit margins, or how much a company makes after all the bills are paid. Usually expressed in percentages, profit margins are a good way to measure the financial health of a company. A healthy restaurant’s profit margin might fall between 3-5% The behemoth retailer Walmart’s net profit margin usually hovers around 2, 2.1%, though that has dipped recently. (A Hartford police officer once told me the profit margin of a smallish cocaine dealer runs somewhere north of 50%, but stay in school, kids.)
What is Eversource’s profit margin? In September, that company’s net profit margin was close to 11%. That same month, the profit margin for Avangrid, United Illuminating’s parent company, was close to 6%. Neither company is hurting, not with Eversource’s nearly $10 billion – with a “b” – profits in 2021, which rose nearly 11% from the year before. For that same time period, Avangrid’s profits hit nearly $7 billion in 2021, up 10.35% from 2020.
After the bid was announced, Gov. Ned Lamont called a special session at which legislators beefed up the state’s energy assistance programs. The state has a helpful web page to explain precisely what is included in residents’ electric bill, but this seems like small beer, considering the impact this will have on family budgets.
Where do these two states – the haves and the have-nots – meet? In the billing department. Despite warnings and fines and news coverage for poor customer communications, these companies haven’t been able to adequately explain to customers the various payment plans available to them. Bonnie Roswig, of the Center for Children’s Advocacy, recently spent an hour on the phone with a social worker, who was trying to direct a client as to how to apply for one of the payment programs offered by Eversource.
“We have endless social problems where there is very little in the way of a solution – housing, for example – there simply is not enough decent affordable housing in the state,” said Roswig. “But regulated utilities – there are actually affordable payment options for all Connecticut residents, but rate payers simply aren’t aware of their options because in our experience, the communication is not effective.”
In February, DataHaven and Siena College Research Institute released a statewide survey that measured the swath the pandemic cut across Connecticut. As you may imagine, people who live in rural and urban areas said they felt the effect of the pandemic economy keenly, though no place escaped job loss. However, while 18% of the people in Greenwich said someone in their family had lost a job, just 5% said they’d relied on a food bank.
In Hartford, 27% of the people surveyed said someone in their family had lost a job, and 31% said they’d subsequently relied on a food bank. From the same survey, 26% of Hartford adults said they’d had trouble paying for food, and 17% said they’d struggled to pay for housing.
If you’re already living on the edge, this could be the tipping point. Look for more residents to slide into arrears on their electric bills. Come May, all bets are off and the companies can again begin shut-offs. Surely there’s a better way to do this.
